Having good business credit is important if you want to take out a loan or apply for a credit card. Both of these tools can help your business grow, but if you don’t have a pristine credit history, they might not be so easy to get.
If you want to know how to get a small loan with bad credit, there are some tips and tricks that can be helpful. If you’re trying to build up your business’s credit score, The Phenix Group can help with that, as well.
In this post, we’ll epxlore some ways to build business credit with and without the assistance of a credit repair company or credit repair attorneys. Each situation is different, so weigh your options before starting on a specific course of action.
Why Get Business Credit?
If you take out loans in your name and fail to pay them, this will impact your personal credit score. If you take out a business loan, it may not if you don’t also give a personal guarantee. Your business credit is generally separate from your personal credit, which is advantageous if either one has some negative marks on it.
Business credit is also a great way to get more money for your business without involving investors. When you work with investors, you lose some or all of the control over your business. Building business credit allows you to get access to funds without losing your status as the legitimate owner of your business.
How to Get Business Credit
It can be hard to build credit without an existing credit history. Here are some ways your business can establish a strong presence with the three major bureaus:
Vendor and Supplier Credit
Some vendors let businesses buy materials and equipment on credit with a promise to pay the balance within a certain amount of time. This is often called a ‘net-30 account.’
Supplier credit works similarly, but the payment plans are often longer term and the contracts more complex. This type of credit is more common with international business transactions.
Loans
The same types of loans you get as a consumer are available to businesses. Mortgages, credit cards, and bank loans are all great ways to build credit, assuming your business can manage the debts.
Getting a credit card in your business’s name is the easiest way to build credit because little credit history is required to get one. There are credit limits and you’ll have to pay interest if the card isn’t paid off in full at the end of the billing cycle, but it is still a great option for building credit.
In Summary
Building business credit is similar to building personal credit–you just have a few more ways to do it. By establishing business credit, you open more doors for your company down the road.
Typically, it takes one to three years to build enough of a history with the credit bureaus to establish a solid credit score for your business. If you pay at least the minimum amounts on your debts each month, you’ll be setting your business up for financial success.
If you need help building your business’s credit score, The Phenix Group can help. We offer individualized action plans to help you maintain your credit, and our attorneys can help you fight negative marks on your business’s credit score!